The co-CIO of blockchain investment firm Pantera Capital recently posted a long opinion piece on Medium about the future of blockchain and crypto. Joey Krug believes that the technology will revolutionize most parts of the financial system, but that it "won't succeed as money".
Krug compares the coming crypto revolution to the development of the internet, pointing out that this was also something that didn't happen overnight. He believes that most assets will eventually be digitally tokenized on the blockchain, completely changing the way the investment and finance system works.
Despite his enthusiasm for this store-of-value aspect of crypto, he claims that Bitcoin and other cryptos will never take the place of fiat money. This is primarily due to their lack of a "dynamic monetary policy". The extreme volatility of cryptos will likely never be resolved enough to allow their mainstream adoption as a payment method, and fiat-pegged stablecoins "won’t hold up against attacks in my opinion, except for large collateral backed reserves like Maker". He does mention the Beam project as one crypto that may be an exception to this.
Read more: Will Bitcoin replace fiat money?
In terms of investment potential, Krug advises "a medium to long-term focus". He explains that the market is "often irrational in the short term, and it will take a while to separate the wheat from the chaff. In short, the market today does not recognize the idiosyncratic attributes of many projects that are actually useful, have strong development teams, and can attract users."
Addressing scalability concerns, Krug believes that these will eventually be resolved, as even a major project like Ethereum is barely three years old and has mostly had to focus on improving developer UX and fixing bugs. In summary, he claims that "the killer apps from the decentralized/parallel financial system use cases are already live. They work, they’re just slow and expensive". Once they are scaled properly, they will be usher in a new technological era.